Tour Operations Management

Transcript Tour Operations Management

Tour Operations and Tourism Distribution Channel Management

Mike Morgan DG28 965174 [email protected]

http://balm.bournemouth.ac.uk

The aims of the unit

• Give an overview of the role of intermediaries in the tourism sector • apply business management approaches to the sector in a practical assignment • provide an academic framework to convert your operational experience • provide a basis for a dissertation

The content

• The role of intermediaries in the tourism system • the elements of tour operations planning • the strategies of the leading companies • New distribution channels for tour products • delivering customer service quality • the future of tourism distribution

The work

Assignment 1 • Group project to design a tour programme • due 5 June Assignment 2 • Essay set by Derek Robbins • due 19 June

Intermediaries

• Those who come between… – Producers/manufacturers – And the end-user customer • Independent organisations who assist the producers to make the product available to the customer

Definitions

• EU Package Holiday Directive ‘a pre-arranged combination of two or more components when sold... at an inclusive price …includes overnight accommodation’ A tour operator = the organiser of a package holiday

The role of the tour operator

• Purchase in bulk components of a holiday • Package them into a standardised repeatable product • Brand them into a single entity • Offer them to the public at an inclusive price Middleton

How does this differ from the role of the travel agent?

An agent

• Acts for a principal (the producer of the product) • provides a service for a fee or a commission • in British usage a travel agent is someone who sells travel and holiday packages for a commission, usually from retail shops • This distinction is becoming blurred

Understanding the tourism system

Exercise

• You are managing a hotel in a destination • Draw a map of the intermediaries involved in marketing your rooms to UK tourists • How do they add value to the end-product?

• What does each party get from the interaction?

• How easy would it be to find a substitute?

The Tourism Industry

Attractions Accommodation Facilities Internal Transport International Transport

Incoming Tour Operators ‘Ground-handling agents’ Tour Operators Travel Agents

National Tourist Office What theories can help us understand how this industry works?

C u s t o m e r s

The value chain

• Devised by Porter (1980) to analyse what happens inside companies - where the value is added to the end product • Applied by Kogut (1985) to the whole external supply chain • Terpstra (2000) writes of ‘configuring the value-added chain’ - which activities to do yourself and which to pay someone else to do.

Specialisation

The same choice faces hotels, resorts, air and sea transport.

• Where does your expertise lie?

• Where can you add most value to the product?

The Value Added Chain

Terpstra and Sarathy (2000) Design Components Manufacture Assembly Accommodation Attractions Transport ‘ principals ’ Package Tour Distribution Marketing Brochure Reservations Retailing Travel Agent How does the tour operator add value?

By providing the ‘principals’ with a marketing channel for their products

Marketing Channels

• Sets of inter-dependent organisations involved in making a product available to the end-user customer ( Stern and El Ansary 1996) • Carry not only flows of product but information, promotion, payment and ownership

• Offer the suppliers ‘contactual efficiency’ in reaching the end customer (Rosenbloom1995) • Make the product available in the ‘utilities’ of form, time and place required by the customer (Bucklin) • require members to subordinate their own needs to the success of the channel (Stern) – issues of control and leadership, power and dependency

Hotel Tour Operator Travel Agent Customer

Network theory

• Looks at relationships, networks and interactions (Gummesson 1988) • a complex web of influences on the quality of the product (Holmund and Kock 1995) • these influences can conflict with each other • Competition is between ‘networks of value delivery systems’ (Kotler 1998) rather than individual firms

Elements of a network analysis

Hakansson and Johanson 1992 • Resources needed to create the product • Actors - firms, organisations involved • Interactions - between actors to create..

• Activities that produce the product • Relationships that develop to ensure long term commitments

Attractions Resort Amenities Hotel Local agent Tour Operator Conference centres Other hotels Tourist Board Destination Network Travel Agent Customer

Transport Network Airline Alliance Car rental Airports Attractions Resort Amenities Hotel Local agent Tour Operator Airline Travel Agent Conference centres Other hotels Financial services -insurance currency IT systems Destination Network Tourist Board Support Network Customer

Transport Network Airline Alliance Car rental Airports Attractions Airline Resort Amenities Hotel Conference centres Other hotels Local agent Tour Operator Travel Agent Financial services -insurance currency Corporate clients Customer Retail centre Management IT systems Web portals & search engines Destination Network Tourist Board

Easyjet ’s Affiliate Network (2008)

• Airline: Easyjet • Hotels: Hotelopia (part of the TUI group) • Car rental: Europcar (part of Volkswagen Group) • Ski Breaks: Erna Low (independent specialist tour operator) • Chalet rental: Chaletgroup (consortium of chalet owners) • Skiwear: BornForSports (community marketplace for sportswear) • Travel Insurance: Mondial Assistance (part of Allianz Group) • To/from the airport: Holidaytaxis • Airport parking: NCP • Travel guides: Arrivalguide.com

Fastcheck AB in association with

Formalising the relationship

• Vertical marketing systems – Star Alliance • administrative – consortia – Best Western • contractual - franchises, joint ventures Opodo • corporate - vertically-integrated companies eg Thomson/TUI

Systems theory

(see Laws) • Based on biological, ecological systems • each component is affected by and in turn affects the behaviour of the others • inputs, processes and outputs • organic growth optimum size and efficiency decline and decay Includes interaction between tourism and the host society and environment

Weather & Climate change Destination environment Destination Economy Fears of crime & terrorism Changes in regulation Economies of originating countries Changing Lifestyles demographics Attractions Accommodation Internal Transport International Transport Facilities

Incoming Tour Operators ‘Ground-handling agents’ Tour Operators

National Tourist Office

Travel Agents

C u s t o m e r s Media influences Investment & changes of ownership New technologies

How are these changing the system?

UK holidays abroad 1999-2005

(UK International Passenger Survey)

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Holidays Inclusive Independent yr1999 yr2000 yr2001 yr2002 yr2003 yr2004 yr 2005

Inter-organisational relationships

What each model reveals • Inter-dependent channel members – efficiency • Value-adding chains - value, profit • Complex and conflicting networks – understanding, trust • Organic and evolving systems – flexibility, responsiveness